12:01 Tuesday

Wonderland

Care to Wager?

I am currently attending the AIPLA Mid-Winter Institute in Las Vegas, in honor of which I present the following graph:

I'm going to see if the sports book here at Caesar's will list a prop bet of Gambling Patents vs. Golf Patents to issue in 2012. Based on early results -- Gambling is leading, 52-32 after four weeks -- this could be an interesting race.

I hear they are also setting an over-under for the number of posts to 12:01 Tuesday this year. Hmm...

Old Becomes New in 2010

Are we starting to see some evidence of President Obama's promised Transparency?

Consider the following odd statistic: 

• Number of patents to issue in 2010 (so far) with prosecution histories of more than 20 years: 10
• Number of patents to issue in 2009 with prosecution histories of more than 20 years: 0
• ,,,in 2008: 4
  
• ,,,in 2007: 3
  

The 2010 patents are shown in the chart below.

 

As you might expect, most of these patents (the longest seven on the list) were subject to secrecy orders in the name of national security that delayed their prosecution and issuance by many years. (Two of the other three patents were involved in long interference battles, and the last one on the list was simply unintentionally abandoned for several years.)

Why the vast difference between 2010 and 2009 (and the previous two years)? One theory is that, under the Obama administration and its promise "to usher in a new era of open government," the secrecy orders on older patent applications were reviewed with a new eye toward transparency, resulting in lifting more confidentiality restrictions than had previously been done. The timing would fit: if the secrecy orders were lifted during Obama's first year in office -- 2009 -- then after a few months of resumed prosecution and preparation for publication, the patents would issue in 2010. Makes sense.

But like many nice theories, it's unfortunately not supported by the facts. In actuality, only one of these patents, 7,673,565, had its secrecy order rescinded in 2009. In fact, the oldest patent on the list, 7,696,460, was declassified in 2000 under Clinton. The others came out of hiding between 2005-2008, during the "secretive" George W. Bush presidency.

For now, we'll just chalk this up to coincidence and randomness. But if someone out there has a better theory, please share.

Class 705 Issuances Rising

For searching purposes, the USPTO classifies patent applications according to their general subject matter.  If you're the type to read the Patent Act cover-to-cover, you may already know that there is actually statutory authority for classification in 35 USC Section 8, which authorizes the Director to maintain a classification system "for the purpose of determining with readiness and accuracy the novelty of inventions for which applications for patent are filed."  Currently, there are over 400 classes, and you can find them on the PTO site if you really are curious (or really are bored...) See MPEP 900 et seq. for more information.

One class that is worth watching, and is part of my weekly scan, is class 705, titled, "DATA PROCESSING: FINANCIAL, BUSINESS PRACTICE, MANAGEMENT, OR COST/PRICE DETERMINATION." Class 705 contains most of the so-called "business method" patents.  Over the past couple years, a typical week would see about 45-65 patents issue from Class 705. Today that number jumped to 111.  And, as shown in the chart below, it appears to be the latest point in an upwards trend.

 
The trend is highlighted by focusing on the 60 patent mark. From January through July 2009, only three times did the number of weekly issuances from Class 705 exceed 60.  But from August 2009 through today, there have been only five weeks when the number was below 60.

This data runs counter to the CW that there would be a post-Bilski drop in the allowance of business method patents. (Potentially, anyway...it may be that there was a surge in non-business method applications from 705.)

Theories?  Could it simply be more examiners being hired in the Art Units that deal with 705-type applications?

Territorial Prosecution

To help in my 7-year old son's quest to collect all the state quarters, each day I ritually place a dollar bill in the vending machine for a diet coke and see what change I get.  Call it my mid-morning excitement.  Just as we were in the home stretch a couple months ago, needing only an Idaho, I looked at my change and saw "Puerto Rico".  Apparently Congress sneaked a new law past me in late 2007 to release six new coins honoring D.C. and the five territories. [Trivia Q #1: can you name all five?  No peeking.]  And now I see there's another batch on the way honoring our National Parks.

I can personally attest that these quarter programs succeed at promoting learning in both kids and adults.  For example, my children have now played all the educational games on the U.S. Mint website (I haven't shown them the similar games on the PTO site).  And I've added two tasks to my bucket list: a) visit all the territories; and b) file a (legitimate) patent suit in the District Court for the U.S. Northern Mariana Islands, where LR 83.3 reminds you that shoes are required attire.  (Guam has the same rule.  I'm aware of only one patent case from Guam, Nanya Tech v. Fujitsu; it was transferred to N.D. Cal.)  And you thought Marshall, Texas was an inconvenient forum… try booking a trip to Saipan.  [Trivia Q #2: what's the only territory that does not have its own U.S. District Court?].  The quarter programs also raise a ridiculous amount of money (several billion dollars) for the government through seigniorage.

Of course, I turned to the patent questions.  A few queries at uspto.gov yielded the following results (current as of 12/31/09):

 No huge surprises.  But a few notes:

• Are you ready for some innovation?  The only two American Samoan patents issued in 1984 and 1997.  Evidently, in the last fifteen years there has been a lot more development of Samoan NFL talent than technology.  (Or soccer skills: the AS team has lost 12 World Cup qualifying matches by a combined score of 129-2). [And American Samoa is the answer to Trivia Q #2].

• Database errors:  Searching for these results in the PTO databases requires looking at both the state ("is/" or "as/") and country ("icn/" and "acn/"), since these fields are sometimes miscoded.  Also, there are typos: Reston is in VA, not VI.  I tried to account for these errors when I saw them.

• Disputed ownership:  The most recent utility patent to issue to a territorial inventor outside PR or DC was U.S. Patent No. 7,624,483, for a "Multi-roller snap ring" used with commercial fishing nets.  The file history reveals a classic ownership dispute, where the purported assignee successfully petitioned to prosecute the application without the inventors' declarations.  The inventors then put several letters in the file pleading their case, including an allegation of forgery in the invention assignment obligation and consulting agreement.  Don't expect this one to be litigated soon.  What's not clear is whether the Examiner could have (should have?)considered these to be "Conflicting 37 CFR 3.73(b) Statements", per MPEP 324.X: 

If, however, the ownership established as controlling is contested on the record by another party who has submitted a conflicting 37 CFR 3.73(b) statement, then the application or other proceeding shall be forwarded by the Office official in charge of the application or other proceeding to the Office of Patent Legal Administration for resolution of the ownership question.

• Under-served, warm weather markets?  Anybody want to open a patent shop in Guam?  Seeing that Chicago is about to be sacked with a foot of snow, it's tempting… 

Happy Birthday, Beauregard

Twenty years ago tomorrow, U.S. Patent No. 4,864,492 issued to IBM for a “System and method for network configuration.”  On its face, nothing appears out of the ordinary with this patent.  However, lurking within its claims is this:

10. A computer program product having a computer readable medium having computer program logic recorded thereon for establishing a network configuration in accordance with a plurality of protocols of a network architecture, said computer program product comprising: means for incorporating the protocols of the network architecture into a table of rules; means for determining the validity of user input data with said table of rules; and means for feeding back to the user at least one of said rules in said table of rules if said user input is determined to be in valid.

 

And thus, the era of the “computer readable medium” claim was born (albeit with 112/6 "means for" language seldom seen in today's CRM claims).

For those unfamiliar with the “software arts,” here’s the nutshell on CRM claims: rather than simply claiming the method (i.e., the steps performed by a computer program) or a computer system (e.g., the hardware configuration that can be used for performing a computer program), the CRM claim essentially tries to protect the floppy disk (remember those?) or CD, DVD, flash drive, etc. on which the program is stored.  For practical purposes, these claims allow software companies, for example, to go after manufacturers of competing programs on theories of direct infringement—they made and sold infringing disks.  When software claims are limited to systems and methods performed via the end user’s computer, often only indirect infringement theories are available.  More importantly, it may be easier to demonstrate infringement by showing a sale of a disk than by finding an actual instance where method steps were performed.  And of course, that sale would still infringe the CRM claim even if the disk were taken to Mexico and the encoded method was actually performed there -- not so with a straight method claim.

The attorney who prosecuted the ’492 patent, the former Marilyn Smith (now Dawkins), also prosecuted a more famous patent for IBM, U.S. Patent No. 5,710,578 to Beauregard et al.  This patent’s prosecution, of course, went up to the CAFC on the question of the patentability of such CRM claims under Section 101.  In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995).   As a result, CRM claims are often referred to as “Beauregard claims”. (Note, however, that that the Beauregard case was vacated, and its merits were thus never ruled upon by the CAFC.)  Interestingly, Dawkins apparently left IBM and now works for (John) Deere & Co. in Moline, Illinois.  But she co-authored a 1995 IDEA journal article on CRM claims that is loaded with examples and explanations.   Dawkins notes that there was an earlier patent, 4,853,962, that claimed the CRM as a multiple-dependent claim of a method:

10. An information storage device tangibly embodying a program comprising instructions adaptable for execution on a programmed machine, wherein the method of any one of claims 1-9 is performable through the execution of said instructions by the machine.

CRM claims are commonplace today.  How common, you ask?  Consider the following charts showing the history of CRM claim issuances, in absolute numbers as and as a percentage of total patents issued:

The upturn of the hockey stick in the later half of the 90's corresponds directly to the Beauregard case working its way up through the courts, casting more light on the claim format.  But it is almost certain that these charts undercount the actual number: there are many variants of language used in drafting CRM claims, e.g., “machine readable medium”, “computer readable storage medium”, etc.  And now, in light of In re Nuijten, you are seeing more tweaks to the standard language to make clear that the medium is limited to a physical storage device.  It is impossible to capture all these permutations with reasonable effort (using the public PTO database, anyway).

Growing even faster is the rate at which CRM claims are being filed, (note the gap in data sources beginning in 2001, when the PTO started publishing pending applications)::

The last data point shows that 5.5% of all applications filed in 2007 (that subsequently published) contained CRM claims.  That's a hefty percentage, but still far short of what we saw for Jepson claims in the early 1980's.

We can only guess how CRM claims will fare after the Supreme Court’s forthcoming decision on Bilski.  Already we have seen inconsistent results from the BPAI.  In Ex Parte Li, for example, the Board gave tremendous weight to Beauregard claims and found that they were outside Bilski’s purview.  Other panels, however, such as in Ex Parte Cornea-Hasegan, have found that CRM claims may just be exaltations of form over substance, and thus are subject to the Machine or Transformation test.

But until things are sorted out, a CRM claim will likely remain as standard ammunition in the software practitioner’s arsenal.

Endangered Species: the Jepson Claim

In one of my posts last week, I noted that a featured patent included Jepson claims.  Jepson claims are not dead (either "merely" or "really most sincerely"), but they may be on their way to extinction.

Jepson claims have been around since at least 1917.  Such claims typically begin with a preamble of already-known elements ("In a system for making widgets with elements A, B and C"), then a transitional phrase ("..the improvement comprising..."), followed by the inventive elements presently claimed ("...elements D and E...")  It has been said that in a Jepson claim, "the claim preamble defines not only the context of the claimed invention, but also its scope." Rowe v. Dror, 112 F.3d 473 (Fed. Cir. 1997).

Jepson claims bear some similarlity to Eurpoean claim forms that use "characterized by..." language.  And like other claim forms, Jepson claims have their pros and cons.  Wikipedia (admit it--you look there, too) actually gives a good summary, noting that Jepson claims can be useful in allowing the Examiner to hone in quickly on points of novelty, particularly in crowded arts.  This could result in fewer Festo-inducing arguments and amendments.  But the big downside, of course, is that there is an admission that the preamble's limitations are known in the art, and presumably (rebuttable) known by others for 103 purposes.  See MPEP 2129.  In a post-KSR world, where the apparently best obviousness attack is to show that an element is missing in the cited references, that doesn't leave much wiggle room.

It is not news that use of Jepson claims is atypical.  Landis writes that "the occasion is rare when it is the recommended format" and that "It is seldom used in practice."  Judge Newman echoed this thought over twenty years ago when she noted that the Jepson form of claim "occasionally continues to be used", and was thus an exception to "the modern style, [where] patent claims no longer merely claim the salient features, the 'heart' of the invention." Pennwalt Corp. v. Durand-Wayland Inc., 833 F.2d 931 (Fed. Cir. 1987) (en banc) (Newman, J., dissenting). 

Less known, however, is that the use of Jepson claims has been dropping at a breathtaking rate.  When Judge Newman made her comments, nearly 8,000 patents with Jepson claims were issuing annually.  Today that number is closer to 1,000.  The remarkable graph below represents the number of patents which include the word "improvement" in their claims, shown annually since 1976.

The law regarding Jepson claims has been pretty stable over this period, so the root cause of this drop-off is probably found elsewhere.  Perhaps it was simply a natural process as new attorneys/agents entered the practice and opted to try claiming more broadly.  Or perhaps there was a growing perception that courts were looking with increasing favor at broadly drafted claims.  I'm not sure.  But if you have a good theory--or a compelling argument why you think Jepson claims will/should have a big comeback--please share.

Anybody care to start a "Save the Jepson claim!" campaign on Facebook?

[UPDATE 6/4/09 1:56PM: The graph below shows the issuance of Jepson patents as a percentage of total issuances.  Peak is over 14% (that's 1 in 7 patents, friends) in 1980, dropping steadily to about 0.7% in 2008]

Patenting the Business of Patents

My post from a few weeks ago on Syracuse University's patent on a method for valuing intellectual property "refreshed my recollection" of a topic I'd considered a while back.  Although it is clear that there has been a recent growth in the secondary market for patents (see, e.g., holding companies such as Acacia, or exchanges such as OceanTomo), perhaps less known is that this secondary market is actually generating its own IP, too.  At least 14 patents are known to exist that are directed to valuing or marketing intellectual property:

7,493,262	Method for valuing intellectual property
7,386,460	System and method for developing and implementing intellectual property marketing
7,346,545	Method and system for payment of intellectual property royalties by interposed sponsor on behalf of consumer over a telecommunications network
7,346,518	System and method for determining the marketability of intellectual property assets
7,315,836	Method for obtaining and allocating investment income based on the capitalization of intellectual property
7,292,994	System and method for establishing value and financing of intellectual property
7,272,572	Method and system for facilitating the transfer of intellectual property
7,269,566	Method for obtaining and allocating investment income based on the capitalization of intellectual property
7,228,288	Method of repeatedly securitizing intellectual property assets and facilitating investments therein
7,216,100	Method for obtaining and allocating investment income based on the capitalization of intellectual property
7,188,069	Method for valuing intellectual property
6,959,280	Method of protecting against a change in value of intellectual property, and product providing such protection
6,330,547	Method and apparatus for establishing and enhancing the creditworthiness of intellectual property
6,018,714	Method of protecting against a change in value of intellectual property, and product providing such protection

A sign of the times: 11 of the 14 issued in the last two and a half years.

Note that this list does not include several other IP-related patents, such as a few dozen that relate to maintaining an inventory of IP assets, or R & D (e.g., allocating resources for IP development) or patent prosecution (e.g., tracking annuity payments).  These 15 are just the ones I'm aware of that specifically target the patent transactional marketplace.  Of course, the irony here is that, by patenting these methods, this secondary market in some ways becomes a primary market, as well.  Another way of thinking of it is that the non-practicing entities who are often involved in the valuations and exchanges of IP covered by these patents may now actually be practicing entities with respect to some of those patents.

There is something beautiful in the recursion here, particularly with the Escherian thought of trying to value or transfer one of these patents by the very methods it teaches. Cool.  Would such a patent then become "auto-claiming?" or "Self-descriptive?" [and to you logicians out there, if every patent is either 'self-descriptive' or 'non-self-descriptive' then what about a patent claiming "a method of transacting IP using at least one unpatented technique"?]

The main player in this space appears to be a St. Louis-based outfit called TEQ Development, with lead inventor Douglas R. Elliott.  Mr. Elliott appears to have been involved with Ocean Tomo through its S\LB Partners private equity fund.  He is listed as inventor on six published applications, four of which have issued and are in the list above.  Other players, based on recently published applications, are Ocean Tomo (e.g., U.S. Pub. 2009/0024513 and 2008/0243642) and Detroit-based e-IP (U.S. Pubs. 2009/0024486 and 2009/0024534).  An interesting application comes out of Connecticut to the Ipie Mae Corporation on securitizing IP assets (U.S. Pub. 2008/0201209).  (I won't comment on how the claims of these apps may be affected by Bilski.  It ain't pretty.)

One has to wonder if these patents collectively can be used as a proxy to indicate the total value of the burgeoning IP transactional marketplace.  For example, the amount for which these IP-related patents may be licensed or sold is probably a good indicator of, say, how much money is expected to pass through at the next IP auction.  On the other hand, based on reports from recent auctions, the patent market bubble may have burst along with the rest of the financial services industry. (Hat tip: Peter Zura).

From a policy perspective, there does seem to be a fundamental problem, however.  (Yes, I am going against my general avoidance of commenting on normative policy here.)  To the extent that these patents may artificially limit a patent owner's ability to sell his property, it would run somewhat counter to one of the underlying principles of the patent system, namely the opportunity for an inventor to obtain value for his invention.  This is different from the situation when, for example, Hootman's patent on a buggy whip lost value because of an industry improvement like, say, the automobile.  Instead, this says that although the underlying invention may be just as valuable to the end user, the value of the patent is worth less because it cannot be sold at a particular kind of auction/securitized/valuated in a certain way/etc.  It's as if the PTO jacked up issue fees by a few bucks, and diverted the difference to a handful of auction operators and fund managers.

I’m all for at least some barriers to entry at the PTO – it’s an easy out for some of the cold calls I get from quacky garage inventors (no offense intended there; I've had several entrepreneurial clients who have been great).  But it doesn’t feel quite right when the barrier is put up by a third party with the PTO’s blessing.  Just my thoughts.

Blog Title Goes Here [Is this correct?]: The value of proofreading

Many patent attorneys have long suspected that examiners during prosecution look only at the claims, and don't even bother with the specification.  My experience of late is that examiners are now more regularly looking at the spec and handing out 112 rejections if there is a lack of support for claim elements, even on first office actions where no amendments have yet been made.  (One recent action I received acknowledged that the original claims were technically part of the specification and thus not new matter, but nevertheless requested that the spec be amended to include the language of those claims.)  But there is still an apocryphal story that I heard once again last weekend of a patent that had buried in its specification something like "Hey examiner, I bet you don't read this".  I've never been able to verify that story (can you?), but I believe it.

When I heard it once again, though, some synapses fired to remind me of Raytheon's U.S. Patent No. 6,792,369 that I had come across a few years ago (thanks, bro).  In this case, it wasn't the examiner who missed it, but the patent attorney.  You're sitting there, reading the specification, when out of the blue, there is this conspicuous note to the inventor in all caps: "PETER, IS THIS CORRECT?"  It's both funny and sad, and no doubt a source of embarrassment for the attorney and firm, who didn't take the few extra minutes to proofread their application before filing it.  

And it made me wonder: just how many of these patents are there with stray notes to inventors?  Well, thanks to Google patents, we have a clue.  Googling just the term "Is this correct?" and sifting through the results yields, believe it or not, at least 23 issued patents, and 49 published applications with such notes.  (By the way, it's tough to do these searches on the USPTO engine because of stopwords.  Google's better on that, but has the drawback of not being current--it has a lag time of several months.)  And that's just one particular phrase.  There must be many others like, "Is this right?" or "Please explain" or "Do you really think this is distinguishable over the prior art, because it also has elements x, y and z."

Well, maybe not quite  as bad as the last one.  But not so far off.  In addition to the general embarrassment, some of these leftovers clearly would be deposition fodder if the patents were litigated.  Consider these, for example:

• U.S. Patent No. 6,331,957 (Intel Corp.) "<<Tsvika, is this correct, or why else is there no such register shown>>"
• U.S. Patent Pub. No. 2006/0212043 (Boston Scientific) "[Is this correct? What level of vacuum is required/preferred?]"
• U.S. Patent Pub. No. 2008/0052358 (Agility Management Partners) "/** Is this correct? Does it describe the way things were in the first version? If not, what is new and when was the change made? **/"

It's also noteworthy that these gaffes are (generally) found in the patents and applications of larger, more patent-experienced clients.  That actually makes sense, since an attorney filing several applications at once for a client with a large portfolio may not give the same attention to each as he might to a smaller client.  But it doesn't make it any more excusable.

What's worse is that the mistakes are rarely fixed: the issued patents with mistakes had those same mistakes in their respective published applications.  So either nobody is proofreading the publications, or nobody wants to 'fess up that they missed it the first time.  (There was at least one patent here, U.S. Patent No. 6,949,112 (Advanced Cardiovascular Systems, Inc.) that had a certificate of correction, but it seems to be the oddball.)

Worse still, in several of the patents, the mistakes persisted through multiple continuations and divisionals.  For example, consider the following four issued patents to Nortel:

• U.S. Patent No. 6,650,803 Method and apparatus for optical to electrical to optical conversion in an optical cross-connect switch 
• U.S. Patent No. 6,813,407 Method and apparatus for bridging optical signals in an optical network 
• U.S. Patent No. 6,944,364 Method and apparatus for regenerating optical signals in an all-optical cross-connect switch
• U.S. Patent No. 6,947,623 Signals and methods for increasing reliability in optical network equipment

Each contain the following language in their specifications:

Full duplex is accomplished over a single optical fiber by transmitting and detecting signals in the single optical fiber at each end.  [NOTE--IS THIS CORRECT TO SAY FOR FULL DUPLEX OVER A SINGLE FIBER. WE HAVE BEEN TRYING TO MOVE TOWARDS SAYING "TRANSPORT" SO WHEN AN OPTICAL RECEIVE AND TRANSMITTER ARE NOT PROVIDED. PLEASE COMMENT. WEA] The network 1304 also provides a bi-directional out-of-band signaling channel so that signals can be received and transmitted in each direction between the optical cross-connect switch and the attached network equipment 1402 and other network equipment coupled to the network 1304. [IN THIS CASE IT SHOULD BE OK TO SAY TRANSMIT AND RECEIVE BECAUSE IT'S THE SINGALING INTERFACE. CORRECT?]

One can't help but wonder how this could possibly be overlooked during a five year span covering at least three different publications and four issued patents.  If the thought was that filing a certificate of correction would draw more attention, that logic died when the first divisional was filed.

As I said before, it's been common belief that examiners ignore the specification when reviewing an application.  Why should we be surprised when we fail to look at the specifications when we are drafting them ourselves?

I'll spare some public shaming and hold off on listing all the applications and patents I've found.  It's enough to know just from the examples above that the problem is more pervasive than any of us in the profession would like.

Biggest. Week. Ever.

Although I haven't done a full analysis to back up the following statement, I would feel safe betting my kids' 529 plans on it: More patent applications were filed the first week of June 1995 than any other week in USPTO history.  How much more, you ask?  Consider the following:

• Number of utility patents issued for apps filed 6/1/1995 to 6/7/1995: 20,557
  
• Number of utility patents issued for apps filed the previous week: 2,476
• Number of utility patents issued for apps filed the following week: 1,564
• Number of utility patents issued for apps filed in all of 1995: 144,515

Staggering, no?  If you are looking at an issued patent that was filed in 1995, there is over a 14 percent likelihood it was filed in one particular week of that year.  But it gets better: half of those 20 thousand patents were filed on a single day: June 7, 1995.

Of course, this should not be shocking to most patent attorneys, who know that June 8, 1995 marked the GATT changes regarding the term of a patent: "17 years from issuance" went to "20 years from earliest claimed priority date".  The mad rush ensued, particularly for anyone with an application claiming priority back a few years or so.  (Jerome Lemelson has thirteen patents that were filed that week; Ronald A. Katz has nine).  I keep imagining what the post office looked like that evening...must have had an April 15th-like feel.  (if you have war stories, please share).

But what is more interesting is watching patents continue to issue that were filed that week nearly fourteen years ago.  So far in 2009, three such patents have issued.  The first,  U.S. Patent No. 7,491,205 issued on February 17, 2009, and will expire in 2026. Had it been filed a day later, it would have expired before it even issued -- it claims priority back to 1988. The other two, U.S. Patent Nos. 7,501,487 and 7,500,433, issued on March 10.

The chart below shows the very, very long tail of tricklers.

Fewer than five such patents have issued each quarter since Q3 2007.  One wonders when the tail will actually stop.

Obviously, when a patent takes this long in prosecution, there is almost certainly a story.  Typically, there is some up-and-down with the BPAI through appeals or interferences.  Sometimes there are just long, unexplained delays at the PTO (such as files that are mysteriously "lost").  But if any of those stories are particularly compelling, you'll be able to read them here.